I don’t know about you, but this time of year tends to be when I get a surge of energy to do a bit of general life-admin. One of the things I know will be on the to-do list for many is tackling the annual Self Assessment. In 2019 alone, HMRC reported that a total of 10,833,177 tax returns were submitted, with 735,258 of them being left to the last day 🤯.
Why do so many of us leave it to the last minute? The short answer: because it takes time, energy and money.
I know from my own experience as a freelancer that it always felt that there was something else more ‘urgent’ to do that day that meant I kept putting it off. I didn’t quite leave it to the last day (31st January), but I certainly got close!
I’ve put together a few tips to help make completing your tax return as painless as possible. By starting your prep now, you can feel in total control of your self-assessment, and avoid any last-minute stress when the deadline arrives.
These are all the important upcoming dates relating to self-assessment. Even something as simple as putting them in your diary can help you keep on top of things:
5th October 2019
Deadline to tell HMRC about a new source of taxable income or capital gain in the tax year 2019/19
31st December 2019
One month until your tax return is due
31st January 2020
Deadline to submit your online self-assessment for 2018/19 Tax Year and pay the balance on any tax due. 1st payment on account* for Tax Year 2019/20 is also due.
5th April 2020
End of Tax Year 2019/20
6th April 2020
Start of New Tax Year
31st July 2020
Deadline for 2nd payment on account for Tax Year 2019/20
*A payment on account is a tax payment made twice a year by those who complete a Self Assessment tax return in order to spread the cost of the upcoming year’s tax.
As you hopefully spotted, the deadline for registering as self-employed is October 5th, so if you haven’t yet registered - get going!
When you register, HMRC will:
When the time comes to fill in your tax return, you’ll want to have all the necessary information to hand in order to make the process as quick and simple as possible.
Here’s a list of everything you’ll need:
As of 2019/20, HMRC has made changes to both the personal allowance limit and tax rates for self-employed people.
Every individual has a personal allowance that resets each tax year. This is the amount in which you can earn income tax free. This tax year this has increased from £11,850 to £12,500, but it’s important to note that it changes based on your earnings. Below you can see the impact of your income on your personal allowance.
Your personal allowance will decrease by £1
for every £2 of income over £100,000
£125,000 or over
As the tax year progresses, it’s important to keep a record of all your business income and expenses. This is directly beneficial to you, as keeping these records makes it easier to do your tax return when the time comes, and also ensures you pay the right amount of tax. You should also keep your proof of records for HMRC, just in case they open an investigation for any reason.
Types of ‘proof’ worth keeping include:
Try to keep them in chronological order, and if possible, keep a note of what piece of work each record relates to as well.
When I did my first self-assessment, I was pretty clueless as to what expenses I could claim; it was only thanks to a friend of mine and their last minute advice on business expenses that I managed to save £1,200 on my tax bill. Lesson learned!
Here’s a brief breakdown of some common expenses which can and can’t be claimed:
To see an exhaustive list of all expenses and categories, head over to HMRC's website.
Hopefully these tips can help you get set up for the self-assessment deadline in advance, before panic-mode sets in. For more help when the time comes, check out our step-by-step guide to filling out your return.
If you’re still spending too much time worrying about your finances, maybe now’s the time to give Coconut a try. Afterall, we’re building Coconut to simplify bookkeeping for self-employed people as much as possible. And good bookkeeping leads to simple, hassle-free tax returns.
With it, you can:
If you want to see what other people are saying, check out our Trustpilot Reviews.
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As part of HMRC’s Making Tax Digital, sole traders will soon be required to complete 4 tax submissions per year instead of 1.
Take a look at the latest sole trader tax rates for the 2021/22 as well as our advice on how to prepare for the new tax year.